Question 10: In the case of Death of
Proper internship and thereafter taken over of business by the legal heir,
1)whether on the date of death ,the Stock which is standing in the balance
sheet, amount equal to Input tax credit availed has to be deposited to the
govt.'
2)whether on the date of death, the capital assets which is standing in the
balance sheet, amount equal to Input tax credit availed or output tax on
transactional value whichever is higher has to be deposited to the govt.'
OR
There is any provision in the GST Act regarding transfer of business without any
liability of payment of tax.
Assumption-No input tax credit is available.
Is position will be different in case of conversion of partnership into proper
internship.
Answer: Provisions to be applied in the given situation are not
specifically given in GST law but we can derive it through various rules and
section as follow
Rule 19 Contains as
follow===============================================================================================================
RULE 19. Amendment of registration (corresponding section 28) (1)
Where there++++++++++++++++++
(d) where a change in the constitution of any business results in the change of
the Permanent Account Number of a registered person, the said person shall apply
for fresh registration in FORM GST REG-01:
=========================================================================================================================
So the legal heir will apply for fresh registration
Now we can refer Rule as
follow==================================================================
===============================================================
RULE 41. Transfer of credit on sale, merger, amalgamation, lease or
transfer of a business (corresponding section 18)
(1) A registered person shall, in the event of sale, merger, de-merger,
amalgamation, lease or transfer or change in the ownership of business for any
reason, furnish the details of sale, merger, de-merger, amalgamation, lease or
transfer of business, in FORM GST ITC-02, electronically on the common portal
along with a request for transfer of unutilized input tax credit lying in his
electronic credit ledger to the transferee:
Provided that in the case of demerger, the input tax credit shall be apportioned
in the ratio of the value of assets of the new units as specified in the
demerger scheme.
(2) The transferor shall also submit a copy of a certificate issued by a
practicing chartered accountant or cost accountant certifying that the sale,
merger, de-merger, amalgamation, lease or transfer of business has been done
with a specific provision for the transfer of liabilities.
(3) The transferee shall, on the common portal, accept the details so furnished
by the transferor and, upon such acceptance, the un-utilized credit specified in
FORM GST ITC- 02 shall be credited to his electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by
the transferee in his books of account.
Since the Rule 41 permits carry forward of ITC on the basis of going concern so
question of payment of tax does not arise in earlier Cenvat credit Rules 2004
similar provision was made in rule 10
So intention is not charge tax if the concept of going concern is not disrupt
Rule 10 of Cenvat credit rule is as follow= (Reply Dt. 05/01/2018)
10. Transfer of CENVAT credit.-
(1) If a manufacturer of the final products shifts his factory to another site
or the factory is transferred on account of change in ownership or on account of
sale, merger, amalgamation, lease or transfer of the factory to a joint venture
with the specific provision for transfer of liabilities of such factory, then,
the manufacturer shall be allowed to transfer the CENVAT credit lying unutilized
in his accounts to such transferred, sold, merged, leased or amalgamated
factory.
(2) If a provider of output service shifts or transfers his business on account
of change in ownership or on account of sale, merger, amalgamation, lease or
transfer of the business to a joint venture with the specific provision for
transfer of liabilities of such business, then, the provider of output service
shall be allowed to transfer the CENVAT credit lying unutilized in his accounts
to such transferred, sold, merged, leased or amalgamated business.
(3) The transfer of the CENVAT credit under sub-rules (1) and (2) shall be
allowed only if the stock of inputs as such or in process, or the capital goods
is also transferred along with the factory or business premises to the new site
or ownership and the inputs, or capital goods, on which credit has been availed
of are duly accounted for to the satisfaction of the Deputy Commissioner of
Central Excise or, as the case may be, the Assistant Commissioner of Central
Excise.
(4) Subject to the provisions contained in sub-rule (3), the transfer of the
CENVAT Credit shall be allowed within a period of three months from the date of
receipt of application by the Deputy Commissioner of Central Excise or Assistant
Commissioner of Central Excise, as the case may be:
Provided that the period specified in this sub-rule may, on sufficient cause
being shown and reasons to be recorded in writing, be extended by the Principal
Commissioner of Central Excise or Commissioner of Central Excise, as the case
may be, for a further period not exceeding six months.